[BOOKCLUB] THE 4 DISCIPLINES OF EXECUTION - DISCIPLINE 2: ACT ON THE LEAD MEASURES

ActOnTheLeadMeasures.md

THE 4 DISCIPLINES OF EXECUTION

DISCIPLINE 2: ACT ON THE LEAD MEASURES

• Discipline 1: WIG for an organization and breaks it down into a set of specific, measurable targets

• Discipline 2: Define the leveraged actions that will enable the team to achieve that goal

• Lag measure:

  • The measurement of a result you are trying to achieve
    • By the time you get the data the result has already happened; they are always lagging
    • The formula from X to Y by when in a WIG gives us a lag measure
    • Revenue, accounts payable, inventory numbers, hospitalization rates, asset utilization etc.
  • Whether you've achieved the goal
  • Hard to do anything about
  • e.g., You can't control how often your car breaks down on the road

• Lead measure:

  • The measurement foretell the result
    • predictive: Measures something that leads to the goal
    • influenceable: Something we can influence
  • Whether you are likely to achieve the goal
  • Virtually within your control
  • e.g., You can control how often your car receives routine maintenance
  • More you act on the lead measure, the more likely you are to avoid the roadside breakdown

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Creating a just-in-time plan: Enable lead measures to quickly adopt, while remaining focused on the WIG

1. Define the daily or weekly measures
2. Identify the most important actions that will drive those lead measures each day/week

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Let's create lead measures

The movement of which will become the driving force for achieving the WIG

WIG Example 1

Increase corn production from 200 tons to 300 tons by September 1

• Lag measure: The X to Y of corn tonnage
• Rainfall: You can predict it, but you cannot influence the weather
• Soil quality/Fertilization rates: You can predict, and influence

WIG Example 2

Decrease total body weight from 190 pounds to 175 pounds by May 30

• Lag measure: from X yo Y by when (You can measure by the bathroom scale)
• Diet/Exercise: You can predict how much calories consumed, and influenceable by you

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Where do leaders normally fixate, on lead measures or on lag measures?

• It's easy for schoolteachers to measure the reading levels of students with a standardized test
• It's hard to come up with lead measure that predict how students will do on the test

How does the school predict?

• Track data on time spent reading or in tutoring (Lead measures)
• Hope and pray that the reading scores (Lag measures)

Lag measure

Who fixates on what?

• Sales leader: Total sales
• Service leader: Customer satisfaction
• Parents: Their children's grades
• Dieters: The scale

Why do people do this?

1. Lag measures are the measures of success
2. Data on lag measures is almost always much easier to obtain and more visible than data on lead measures

Lag measure: The people who do diet/exercise Lead measure: The people who actually measure how many calories they've eaten and how many they've burned each day

Defining lead measure

Increase annual water production from 175 million liters to 185 millions litters by December 31

What they thought a good lead measure: Monthly water production

What they thought it would be for that: Daily water production

What it should be:

• Increase percentage of shifts with full crews from 80% to 95%
• Increase percentage of compliance to preventive maintenance schedules from 72% to 100%

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Leverage - the key principle behind lead measures

lever's two primary characteristics

1. It's something we can move (influenceable)
2. When it moves, the rock moves (predictive)

The 80/20 activities - What 20 percent of what you do has as much or more leverage on the WIG than 80 percent of what you do?

The mass of activity will always be pointless, poorly conceived, badly directed, wastefully executed, and largely beside the point. A small portion of activity will always be terrifically effective.... it is probably not what you think it is; it is opaque and buried within a basket of less effective activity.

-- Richard Koch

The story of Moneyball

• How to gain the number of customers? -> Win.
• How to win? -> The number of runs.
• What are the lead measures that create a run? -> To track the on-base record of players and hire them

The story of Younger Brothers Constructions

• Lead measure data is more difficult to acquire than lad measure data, but you must pay the price to track your lead measures
• Track lead measures, track data, otherwise no leverage

High-leverage activity

• Have your preflight checklist
• Reduce out-of-stocks